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The Key Takeaways

• Investing in a cause that we feel passionate about can give our lives new purpose.
• Even if we have limited finances, we can still find ways to contribute by giving of our time and/or talents.
• Our giving can influence subsequent generations and others around us by setting an example and communicating our values.

Finding Your Passion and Renewing Your Life

• If you are still searching for a way to make a difference, give some thought to what inspires you or what you care about deeply. It could be the arts, reading, the elderly, our military, disadvantaged children, teen mothers, or a clean planet.
• There are many organizations that need volunteers and financial help to do their good works. And, of course, most churches and religious organizations offer numerous ways to volunteer in your community and around the world.

Actions to Consider

• If you have children at home, include them in your volunteer work. If you make a donation, deliver the check in person and take your children with you.
• If you are retired or nearing retirement, you have the benefit of extra time to donate to your favorite causes. Some people choose to work part time in retirement so they will have extra money for living expenses and for donations.
• If you aren’t sure how to contribute, ask the organization you want to help. They are sure to have a number of suggestions with different time and money commitments.
• Whenever possible, work with local organizations that benefit your community. Get to know the people running the organization so you will know if they can be trusted with your contributions. This will also allow you to see the progress firsthand.
• If you have more substantial means, a charitable trust is an excellent way to give, and such a trust gives you many financial and non-financial benefits.

We use a variety of insurance products to manage risk in different areas of our lives in order to protect our wealth from losses that can come from property damage, businesses we own, disability, retirement and death. Instead of considering these products as separate items, make them part of an integrated, overall risk management plan.
 
Different Kinds of Insurance for Different Risks

1. Property: This would include insurance on automobiles and other vehicles; home, furnishings, jewelry and artwork, and personal liability insurance.
2. Business: Business owners need insurance on a building they own, office equipment and computers, as well as liability, worker compensation, errors and omissions insurance, and so on.
3. Health and Disability: Disability income insurance replaces part of your income for a certain length of time if you should become ill or injured and unable to work. Health insurance helps to pay for medical services received. Long-term care insurance helps to pay for extended care that is not covered by most health insurance or Medicare.
4. Retirement: Annuities and other insurance products can help replace income after retirement.
5. Estate Planning: Life insurance is often used to replace an earner’s income; to pay funeral expenses, debts and taxes; to fund family and charitable trusts; to fund a business buyout and compensate the surviving owner’s family; and to provide an inheritance to family members who do not work in a family business.

Actions to Consider

1. Trying to coordinate your insurance and manage your risk yourself is a daunting task. Instead, work with a team of advisors who have the knowledge and experience to help you make sure your risks are covered at the appropriate levels, without duplication and unnecessary costs.
2. An advisory team will usually include your financial investment advisor, estate planning attorney, and life, health and property/casualty insurance agent(s). Other members may be added to this team as needed.

With 2015 right around the corner, it’s time to start thinking about your new year’s resolutions.
 
It doesn’t matter whether you have an estate plan or don’t, one important item to add to your list is getting an estate plan checkup.
 
Don’t Have an Estate Plan?

• If you don’t already have an estate plan, then getting one in place should be at the top of your 2015 new year’s resolutions.
  Why? Because without an estate plan, you and your property may end up in a court-supervised guardianship if you become incapacitated, and your property and your loved ones may end up in probate court after you die.
• Worse yet, if you don’t take the time to make your own will, then the state where you live at the time of your death will essentially write one for you, and it most likely won’t divvy up your property the way you would have.
• A common misconception is that estate planning is only necessary for wealthy people. But this simply isn’t true – anyone with a bank or a retirement account, a home, or a family needs to make a plan for what happens if they become incapacitated or when they die. Of course the complexity of a plan will vary depending on your circumstances, but all estate plans should be put together with the help of an attorney who is experienced with the legal formalities required to create a valid will, trust, health care directive, and power of attorney in your state.

How Old is Your Estate Plan?

• Do you already have an estate plan?
• If you do, then please pull your documents out of the drawer, dust them off, and look at the date you signed them.
• Were your documents signed in the 80s or 90s, or, worse yet, before 1980? Then please run, don’t walk, to an estate planning attorney, because your documents are terribly out of date and need to be brought into the new millennium as soon as possible.
• Did you sign your documents between 2000 and 2009? Aside from the federal estate tax exemption jumping from $675,000 to $3,500,000 during that time period, state estate taxes disappeared in many states. Because of the significant changes in federal and state estate taxes, documents from this time period can be out of date and need to be tweaked in some shape or form.
• Did you sign your documents during 2010, 2011, or 2012? Federal estate taxes, gift taxes, and generation-skipping transfer taxes went through major changes during these years, and “portability” of the federal estate tax exemption between married couples was introduced. Unfortunately, while your estate planning documents may only be a few years old, they very likely do not take advantage of the opportunities made available from recent changes in federal tax laws. And, it’s not just tax laws that are changing – modifications to state laws governing wills, trusts, health care directives, and powers of attorney may warrant some revisions to your estate planning documents as well.
• And last but not least, regardless of what year you signed your estate planning documents, think about all of the changes in your life since you signed them. Did you get married or divorced, have a child or two or a grandchild or two, or move to a new state? Did you sell your business, retire, have a significant change in assets, or win the lottery? Any major changes in your family or financial situation will certainly have an affect on your estate plan.

Estate Planning is Not a One Shot Deal

• Estate planning is not a static event that you do once and then forget about it. On the contrary, estate planning is a continuing process, because life is a moving target that is full of constant change, so your estate plan needs to change as your life changes.

In general there are four grounds to challenge the validity of your will or trust:
 
1. The will or trust was not signed as required by state law. Each state has specific laws that dictate how a will or trust must be signed in order for it to be legally valid (usually wills not entirely in your handwriting must be signed in the presence of two witnesses who meet certain requirements).
 
2. The person making the will or trust lacked the necessary capacity. The capacity to make a will means that the person understands (a) their assets, (b) their family relationships, and (c) the legal effect of signing a will or trust. Each state has laws that set the threshold that must be overcome to prove that a person lacked sufficient mental capacity to sign a will or trust. Some states apply the same standard to establishing a trust and others apply the standards for capacity to make a contract (understand the purpose and effect of the contract).
 
3. The person making the will or trust was unduly influenced into signing it. As people age and become weaker both physically and mentally, others may exert influence over decisions, including how to plan their estate. Undue influence can also be exerted on the young and the not so young. In the context of a will or trust contest, undue influence means more than just nagging or verbal threats. It must be so extreme that it causes you to give in and change your estate plan to favor the undue influencer.
 
4. The will or trust was procured by fraud. A will or trust that is signed by someone who thinks they are signing some other type of document or a document with different provisions is one that is procured by fraud.
 
Will and trust contests are on the rise. Putting together an estate plan that is designed to head off challenges will go a long way to giving you and your loved ones peace of mind.
 
If you are interested in learning more about how to create and maintain an estate plan that will be difficult to overturn, please call our office now.

A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart. But with proper planning, you can help your family avoid a potentially disastrous will or trust contest.
 
If you are concerned about challenges to your estate plan, consider the following:

1. Let family members know about your estate plan. When it comes to estate planning, secrecy breeds contempt. While it is not necessary to let your family members know all of the intimate details of your estate plan, you should let them know that you have taken the time to create a plan that spells out your final wishes and who they should contact if you become incapacitated or die.
2. Use discretionary trusts for problem beneficiaries. You may feel that you have to completely disinherit a beneficiary because of concerns that a potential beneficiary will squander their inheritance or use it in a manner that is against your beliefs. However, there are other options than completely disinheriting someone. For example, you can require that the problem beneficiary’s share be held in a lifetime discretionary trust and name a third party, such as a bank or trust company, as trustee. This will insure that the beneficiary will only be entitled to receive trust distributions under terms and conditions you have dictated. You will also be able to control who will inherit the balance of the trust if the beneficiary dies before the funds are completely distributed.
3. Keep your estate plan up to date. Estate planning is not a one-time transaction – it is an ongoing process. Therefore, as your circumstances change, you should update your estate plan. An up to date estate plan shows that you have taken the time to review and revise your plan as your family and financial situations change. This, in turn, will discourage challenges since your plan will encompass your current estate planning goals.

By following these four tips, your heirs will be less likely to challenge your estate planning decisions and will be more inclined to fulfill your final wishes. If you are concerned about heirs contesting your will or trust, you should seek the professional advice now.

• Studies have shown that 70% of family wealth is lost by the end of the second generation and 90% by the end of the third.
• Help your loved ones avoid becoming one of these statistics. You need to educate and update your heirs about your wealth transfer goals and the plan you have put in place to achieve these goals.

What Must You Communicate to Future Generations to Facilitate Transfer of Your Wealth?

1. Net worth statement, or at the very minimum a broad overview of your wealth
2. Final wishes – burial or cremation, memorial services
3. Estate planning documents that have been created and what purpose they serve:
4. Who will be in charge if you become incapacitated or die – agent named in your Durable Power of Attorney and Health Care Directive; successor trustee of your Revocable Living Trust and other trusts you’ve created; personal representative named in your will
5. Benefits of lifetime discretionary trusts created for your heirs
6. Overall goals and intentions for inheritance – what the money is, and is not, to be used for (in other words, education vs. charitable work vs. vacations vs. Ferraris vs. business opportunities vs. retirement), and who will be trustee of lifetime discretionary trusts created for your heirs and why you’ve selected them
7. Where important documents are located – this should include how to access your “digital” assets
8. Who your key advisors are and how to contact them

How Can Your Professional Advisors Help You Communicate Your Wealth Transfer Goals?

• Your professional advisors are well-positioned to help you discover your wealth priorities, goals, and objectives and then communicate this information to your heirs. This, in turn, will prepare your heirs to receive your wealth instead of being left to figure it out on their own and, as statistics have shown, lose it all.
• We are available to assist you with figuring out your wealth transfer goals, putting a plan in place to achieve these goals, and effectively communicating this information to your loved ones.